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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22641
Experience:  Taxes, Immigration, Labor Relations
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I am a referral agent in housekeeping services in Florida.

Resolved Question:

I am a referral agent in housekeeping services in Florida. How shall I pay taxes? What should be specified in my contract?
Submitted: 9 months ago.
Category: Tax
Expert:  Lev replied 9 months ago.

Lev :

Hi and welcome to our site!
In general - your referral fees are considered self-employment income.
In most situation the contract specifies a percentage of your pay based on the total contract for specific time period. For instance - your fees might be 50% of the contract for the first month and 10% thereafter.
There might be additional obligations of parties.

For federal tax purposes - you will report all business income and expenses - on the schedule C -http://www.irs.gov/pub/irs-pdf/f1040sc.pdf
The net income (after deductions)will be reported on the form 1040 line 12 - http://www.irs.gov/pub/irs-pdf/f1040.pdf
If the business has net income over $400, it may be required to file Schedule SE, Self-Employment Tax and net income is likely self-employment income and 15.3% self-employment tax would be required.
Self-employment taxes from schedule SE will go to the form 1040 line 56 - http://www.irs.gov/pub/irs-pdf/f1040.pdf
Also - you will deduct half of self-employment taxes on the line 27.
Generally - that all you needs for income tax purposes . Please review all possible deductions - that might help to reduce income tax liability.

Lev :

Here are sample contracts you may use as a prototype - and adjust for your needs
http://www.stcrmc.org/assets/Meetings/Referral20and20Non-Circumvent.pdf
http://www.startupbiz.com/wp-content/uploads/2013/04/Finders-fee-Referral-Agreement.pdf
http://www.rocketlawyer.com/document/referral-fee-agreement.rl

Customer:

I have housekeeping referrals.. It is difficult to figure out the percentage. Can I put a certain amount for each referral, for ex., 25 dollars

Lev :

Yes - you may specify a certain amount - if both parties agree - that is not an issue.

Customer:

how can I specify that it is one time referral. They are not supposed to use it if they need it the second time..

Lev :

That will be in your contract between you and housekeeping provider. You may specify additional fees for violation of contract terms. There is no strict rules - as long as both parties agree - that is OK.

Lev :

Please see here examples for referral fees - http://allpromaidservices.com/referral-finders-fee-2/

Customer:

Do I need to register myself or I can work as an individual and just pay additional income fees?

Customer:

taxes

Lev :

You are not required to have any registration.
But if you want to create a separate business entity - you may for instance register the LLC.
If you just started - I suggest to keep things as simple as possible.

Customer:

thank you!

Lev :

If you will earn larger amounts - and your tax liability will be more than $1000 - you might need to pay estimate taxes. Estimated tax is the method used to pay tax on income that is not subject to withholding.

Customer:

Can I send all this information to my e-mail please

Lev :

In this case - you should use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax. For additional information on filing for a sole proprietor refer to Publication 505, Tax Withholding and Estimated Tax.

Customer:

Have a good day!!!

Lev :

Please be aware - experts do not have access to your account and your email.
But you may save this conversation locally on your computer.
You may also come to this page later - and review our conversation again - here is the address of this page -
http://www.justanswer.com/tax/813hc-referral-agent-housekeeping-services-florida.html

Customer:

thank u!

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 22641
Experience: Taxes, Immigration, Labor Relations
Lev and 5 other Tax Specialists are ready to help you

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